UGANDA, TZ MINISTERS TO MEET TODAY OVER OIL PIPELINE
UGANDA, TZ MINISTERS TO MEET TODAY OVER OIL PIPELINE
Kampala. An inter-government ministerial committee from Uganda and Tanzania will meet today in Kampala to discuss the proposed East African Crude Oil Pipeline.
Key on agenda, according to sources familiar with the matter, is the harmonisation of the Host Government Agreements (HGAs) of Uganda and Tanzania.
The HGA, whose signing is way behind schedule, details among others, rights and obligations of each of the parties – Uganda, Tanzania, and the joint venture partners – Cnooc, Total E&P, and Tullow Oil, transfer of money and acceptance to international arbitration, on the on $3.5b (Shs13 trillion) oil pipeline.
Today’s meeting was preceded by meetings of the technical team (permanent secretaries) from the Energy ministries of the two countries.
Once a harmonised position has been reached, the HGA will be signed later this year and subsequently ratified by the respective parliaments.
The HGA is a precursor to other key agreements such as shareholders and transportation, among others, to be negotiated with joint venture partners, before reaching Final Investment Decision.
The 1,445-kilometre pipeline will run from Hoima district in mid-western Uganda through 10 districts to Tanzania’s southern Tanga Port on the Indian Ocean coast.
Only 20 per cent – 298km – of the pipeline total length is in Uganda. The section, according to a project brief seen by Daily Monitor, is expected to cost $700m (Shs2.4 trillion).
Uganda and Tanzania are expected to shore up between 30 to 45 per cent of capital expenditure through their respective national oil companies – Tanzania Petroleum Development Corporation and Uganda National Oil Company.
Construction is expected to commence next year, and is projected to take 36 months during which between 5,000 and 10,000 direct and indirect jobs will be created.
MASTERMIND SEEKS OUT OF COURT DEAL IN TAX ROW
MASTERMIND SEEKS OUT OF COURT DEAL IN TAX ROW
Mastermind Tobacco, owned by business tycoon Wilfred Murungi, is negotiating with the Kenya Revenue Authority (KRA) in a bid to settle a Sh1.99 billion tax dispute out of court.
Lawyers representing the parties Tuesday told Justice Pauline Nyamweya that they have made progress in the negotiations and asked for more time to reach a consent.
Mastermind Tobacco sought court protection after KRA sent auctioneers to seize assets of the cigarette maker over the company’s failure to pay the tax arrears.
“The negotiations are ongoing and we request to come back for a mention on December 5, 2018 to record a consent or report on progress and extension of the orders,” lawyer Macharia, representing Mastermind, told the court, a position which the KRA’s counsel agreed with.
The Judge directed the case to be mentioned on December 5, and extended court orders stopping KRA from seizing or auctioning Mastermind’s assets.
Mastermind Tobacco says that the taxman sent a notice of distress on September 19 and instructed auctioneers to attach its assets with a view to recovering the colossal sum.
Mastermind, which makes the Supermatch brand of cigarettes, said it is apprehensive that unless restrained the auctioneer might attach its entire assets and destroy its business permanently.
Leakey’s Auctioneers have moved in and given Mastermind 10 days to settle the arrears or have its property sold by public auction. Mastermind went to court seeking orders suspending the demand, pending determination of an appeal it has filed at the Tax Tribunal.
The cigarette firm argues that although the tribunal has power to suspend the demand, it lacks quorum because only the chairman is in office following the expiry of other members’ tenure in March.
Mastermind has accused the KRA of failing to give it an opportunity to be heard, noting that the demand notice was received on August 31, 2018 and the attachment of its property commissioned three weeks later.
JAMESON WHISKY RELEASED IN SH700M TAX DISPUTE
JAMESON WHISKY RELEASED IN SH700M TAX DISPUTE
The Kenya Revenue Authority (KRA) has been ordered to release detained imports of the popular Jameson Whisky following a disagreement with its importers over valuation of the alcohol.
Justice Wilfrida Okwany further barred KRA from adjusting the custom price of the Pernod Ricard Kenya imports for purposes of tax computation or detaining them pending the hearing and determination of the suit.
Pernod moved to court after the taxman detained the consignment, which also contains other products, demanding nearly Sh700 million tax arrears from the company.
The KRA in January sent Pernod a Sh697 million demand notice covering the period between July 2012 and December 2016 on grounds that an audit had revealed massive under-declaration of the value of its imports.
“I find that the instant application is merited and I allow it as prayed,” ordered Justice Okwany.
The Judge said KRA can recover the tax from the firm if the case is ruled in its favour, but Pernod cannot recover lost sales.
KRA wants the importer to adjust the custom price of the goods for purposes of tax computation but Pernod has objected to the demand and filed an appeal with the Tax Tribunal.
KRA had on July 3 agreed to release the four consignments pending determination of the court case.
But the deal never materialised leading Pernod to file a fresh application accusing KRA of refusing to release the consignment even after the importer provided a bank guarantee.
The firm argues that it continues to incur heavy warehouse charges and is running out of supplies to service its customers.
KRA has opposed the application noting that the firm had enjoyed restrictive benefits of being the only dealer, making it difficult to compare transactional values.
QATARI CONVICTION OF ARBITRATORS 'DEEPLY CONCERNING', SAYS ICA CHIEF
QATARI CONVICTION OF ARBITRATORS 'DEEPLY CONCERNING', SAYS ICA CHIEF
Prison sentences passed on three international arbitrators in Qatar have raised concerns about the Gulf state’s ability to act as a fair forum for dispute resolution. The president of the International Court of Arbitration (ICA) has told the Emir of Qatar that the institution is ‘deeply concerned’ by the convictions.
In a letter to Sheikh Tamim bin Hamad Al Thani, ICA president Alexis Mourre said the situation is having ‘highly detrimental’ impacts on Qatar as a safe and trusted venue. The Qatari International Center for Conciliation and Arbitration was established in 2006, one of a series of initiatives by Gulf states to build international investor confidence.
In October last year a Qatari court sentenced three arbitrators to three years in prison for allegedly participating in criminal activity to cause harm to a prominent Qatari businessman, Sheikh Khalid Nasser Abdullah Al Misnad. The arbitrators had transferred a dispute involving the sheikh and a construction company from the Qatar centre to ad hoc proceedings in Tunisia. The Tunisian proceedings went ahead, with the tribunal issuing an award against the sheikh for around £20m.
The Lower Criminal Court in Doha subsequently issued a ruling in absentia against the three arbitrators; Sami Houerbi, Nathalie Najjar and Samir El Annabi.
The dispute began when Al Misnad filed an application against construction company Société d’Entreprise et de Gestion at the arbitration centre. The tribunal transferred the arbitration to Tunisia on the grounds that it would be a more neutral base.
In the letter, seen by the Gazette, Mourre said the ‘three well-known international arbitrators’ had been imprisoned as a consequence of their jurisdictional and procedural decisions. ‘The tribunal decided that the arbitration agreement referred to ad hoc international arbitration rather than institutional arbitration. Decisions of that kind, as right or wrong as they may be, are routinely made by international arbitrators, and it is unprecedented that they would result in a criminal conviction,’ Mourre said.
He added: ‘It is also a generally recognised principle of procedural law that arbitrators as any party in criminal proceedings could not be convicted without having been duly summoned and fully informed of the charges made against them and of the date of the hearing. It would be totally unacceptable if such a generally accepted legal principle of due process had not been strictly complied with in the present case.’
According to Mourre’s letter, a number of arbitrators hearing cases involving Qatari parties or seated in Qatar ‘may now resign from tribunals, express their reluctance to accept appointments in future cases, or subject their acceptance to parties accepting to move the seat of the arbitration out of Qatar’.
Qatar’s legal sector is already suffering from the effects of the 2017 severance of economic ties with Bahrain, Saudi Arabia and the United Arab Emirates.
Max Walters
NIGERIA: $8.1BN REPATRIATION SAGA - MTN HIRES 15 LAWYERS
NIGERIA: $8.1BN REPATRIATION SAGA - MTN HIRES 15 LAWYERS
Justice Saliu Saidu of the Federal High Court in Lagos will on December 4 hear the preliminary objection filed by the Central Bank of Nigeria (CBN) against a suit filed by MTN Nigeria Communications Limited challenging the $8,134,312,397.63 fine imposed on it by the apex bank over alleged forex remittances infractions.
Justice Saidu adjourned the case after counsels to the parties, Chief Wole Olanipekun (SAN), who led a team of 15 counsels comprising 5 other SANs and ten other lawyers for MTN, and, Seyi Sowemimo (SAN) and Ademola Akerele (SAN) for CBN agreed to argue the preliminary objection and all other pending applications on the agreed date.
The judge also ordered that a hearing notice should be served on the Attorney General of the Federation, Abubakar Malami (SAN), who was joined as the 2nd defendant in the suit but was absent in court.
In the suit, marked FHC/L/CS/1475/2018, MTN is seeking a court declaration that it’s not liable to pay the sum $8,134,312,397.63 demanded as penalty from it by the defendants vide his letter of 3rd September,2018.
While the apex bank in its statement of defence and counter-claim, has urged the judge to dismiss MTN’s suit, insisting that the telecommunications giant must refund $8.1bn to the federal government.
MTN, in its suit, is also seeking an order of injunction restraining the defendants ,their agents whatsoever acting on their authority from giving effect to the decisions,demands and directive contained in the letters of August 28,and september, issued by the defendants.
The telecommunications company is further praying the court to declare that “the 1st defendant’s decision in its letter of August 28, 2018 with Ref No GBD/GOV/COM/DGF/118/121 addressed to the plaintiff and titled: ‘Investigation into the remittance of foreign exchange on the basis of the illegal capital importation certificates issued to MTN Nigeria Communications Limited’ were reached in breach of the plaintiff’s right to fair hearing.”
MTN urged Justice Saidu to hold that the CBN “lacks the power to determine the civil obligations or penal liabilities of the plaintiff.”
It is urging the court to the declare that the CBN acted ultra vires its statutory powers when it wrote the August 18 letter to it demanding a refund of $8.1bn.
The firm wants the court to hold that the $8.1bn demand was “illegal, oppressive, abusive, unauthorised and unconstitutional.
In a statement of claim jointly filed before the court by Chief Wole Olanipekun and four other Senior Advocates of Nigeria, MTN states that between 2001and 2006 its shareholders invested the total sum of $402,590,261.03 into it to meet the various obligations ,including statutory payments to the government of Nigeria which was confirmed by the CBN.
According to the firm, the investment were issued by authorized dealers who are Standard Chartered bank, Diamond bank and Citibank,the CCI were converted into equity and preferential shares, as the article of the association allows it to alter its share capital.
It stated, however, that by a letter signed by the Governor of Central Bank,CBN communicated a decision to MTN through the Managing Director of Stanbic Chartered bank limited whereby it decided amongst others, against the plaintiff, that “the action of your company and the banks represent a flagrant violation of the extant laws and regulation of the Federal Republic of Nigeria on foreign exchange matters.
“The sum of $8.1bn illegally repatriated by MTN on the basis of illegal issuing of CCIs should be refunded to the coffers of the central bank of Nigeria with immediate effect”.
MTN posits that the CBN lacks power to make a finding of illegality and it also has no power to penalise the plaintiff on the basis of alleged illegality.
But the Apex bank averred, in its preliminary objection, that MTN Nigeria communication limited deliberately withheld information on What proportion of the sum of $402,590,261,03 was imported into the Federal Republic of Nigeria as Shareholders loan and was equity.
CBN said in the course of its supervision of the foreign exchange market, an issue of foreign exchange with irregular CERTIFICATE OF CAPITAL IMPORTATION (CCI) arose in respect of certain foreign exchange transactions carried out by Standard Chartered bank Limited, Stanbic IBTC bank limited, Citi bank Nigeria limited and Diamond bank Plc collectively referred to as “the bank.s”.
“CBN carried out a special investigation of the said transactions and it came to light that the banks had at the material time between 2007 and 2015 used irregular CCI to remit foreign exchange amounting to $8 134,312,397.63 on behalf of MTN Communications Limited and for the benefit of its shareholders.
“CBN met the banks and MTN’s representatives on 25th May,2018 on the issue and they each made copious representation to CBN. Upon consideration of all the relevant issues including MTN and the banks’ representations CBN demanded immediate refund of the foreign currenci es repatriated to its account.
“Standard Chartered bank limited, one of the bank involved in the irregular transactions admitted in writing that it repatriated foreign exchange for MTN without obtaining a final approval from CBN, it further stated that its action was an unintentional omission which its regretted, and MTN conceded this in its statement of claim. CBN intended to rely on the Standard Chartered bank limited at the tria of this suit.
“CBN averred further that contrary to the statement of claim of MTN, it was condition precedent to obtain the CBN’s final approval before foreign exchange currency can be repatriated in the circumstances and MTN and the banks are aware of this condition.
“CBN contended that MTN would not make a similar claim of right as is being made in this suit in the United States Of America, in the United kingdom, the Republic of South Africa or other countries of the world.
“MTN did not comply with the conditions attached to the CBN approval in principle, as MTN refused to provide an undertaking that no remittance for both interest and principal would be made on loan to its shareholders from the date of the loan to the date of its conversion into preference shares.
“CBN averred that the names of the banks are cleverly omitted by MTN from this suit.
“The CBN did not deny that the plaintiff has a right to alter its share capital structure, but when such alteration has a corresponding effect of CCI from shareholders loan to equity, its approval became necessary.
“The action of the banks and the circumstances of MTN leads to the inference that the foreign investment transaction may have been premeditated and contrive as a scam to make maximise profits, defraud the Federal Republic of Nigeria and to enjoy unlimited foreign exchange laws and regulation”.
The apex bank said MTN’s banks failed to verify that the telecom group had met all the country’s foreign exchange regulations.